Intel abused its dominant position in Europe by giving customers incentives to favour its products over those of its main competitor, regulators allege.

The initial findings of a probe by the European Commission has concluded the chip firm engaged in anti-competitive action to thwart principal rival AMD.

Regulators have the power to fine Intel up to 10% of annual turnover if they find it guilty of stifling competition.

Intel said it was "confident" it had acted lawfully.

Inducements

Outlining its case against Intel, the Commission said it believed its conduct had been "aimed at excluding AMD from the market".

It accused the world's largest chipmaker of giving rebates to customers provided they bought Intel products and offering incentives to companies to delay or cancel products containing AMD technology.

Furthermore, it said Intel had offered microchips for computer servers at below cost.

We are confident that Intel's conduct has been lawful, pro-competitive, and beneficial to consumers,

Bruce Sewell, Intel

These violations added up to a pattern of anti-competitive behaviour, Brussels added.

"If the preliminary views expressed are confirmed, the Commission may require Intel to cease the abuse and may impose a fine," it said in a statement.

Intel has 10 weeks in which to respond to the Commission's objections and has the right to request an oral hearing to argue its case.

Intel said it believed allegations of illegal behaviour would prove to be unfounded, adding that its behaviour was actually consumer-friendly.

"We are confident that the microprocessor market segment is functioning normally and that Intel's conduct has been lawful, pro-competitive, and beneficial to consumers," Bruce Sewell, a company lawyer, said in a statement.